While airlines and GDSs continue their verbal and legal sparring over the future of travel distribution, the GDS remains an essential tool for the agencies that use them, according to ASTA's 2012 GDS Report.
ASTA, whose membership includes about 20% of all U.S. agencies, surveyed 365 member agencies for their take on GDSs. Travel Weekly supplemented that research by interviewing representatives of some of those agencies as well as others.
The number of agencies using a GDS continues to shrink, falling to 72% this year, ASTA's survey found. That's down from a high of 90% in 2005.
Even so, Melissa Teates, ASTA's director of research, said the decline in GDS use has been slowing. In 2010, 76% of agencies used a GDS, while in 2011 the number was 75%.
She predicts that the decline will ultimately stop, because the business model of current users is predicated on selling air, and nothing beats a GDS for booking seats on planes.
Susan Garza, assistant vice president of operations for the host agency Uniglobe Travel Center, said that 70% of the company's agents use GDSs, and the primary reason is speed. Uniglobe is a host for Amadeus and also uses Sabre and Apollo.
"Any good, strong GDS agent can sit side by side next to anyone who does GUI point-and-click [booking] and just wipe them out," she said.
Corporate agents tend to use GDSs more than leisure agents because air is so essential to corporate travel.
In fact, among agencies that said they had considered not renewing their GDS contract but had renewed it anyway, 58% cited the ease and booking speed GDSs provide as a reason to stay with a system (Click on the image, left, for a larger version of a chart of the reasons agents decided to stay with a system).
Eighty percent of all agencies surveyed said GDS functionality drove their choice of a system.
Heather Dolstra of Democracy Travel in Washington, a survey participant interviewed by Travel Weekly, said her GDS is one of the tools that keeps her in business; she estimated that she uses it for 90% of her bookings.
Despite the continuing push by airlines to encourage agents to book directly through the carriers' websites, many say that GDSs remain their best option. Among agencies that had considered not renewing their GDSs but ended up staying with them, 47% said that what drove their decision was the lack of a viable alternative.
Joe McClure, president of Montrose Travel, a $135 million agency ranked No. 54 in Travel Weekly's 2012 Power List, said the most important attribute of the GDSs is their role as industry aggregators.
"The aggregation of content is critical to the continued success of the travel distribution system," he said.
McClure said the GDS was essential for comparison shopping, and for an agency like Montrose, being able to shop multiple airlines and hotels enables the agent to offer real value to a customer. The same, he said, is true for smaller shops.
Accessibility is another GDS attribute cited by many agents. Elite Travel President Stacy Small, whose firm books both corporate and leisure travel, said that as long as she has her netbook and Internet access she can do business via her GDS from anywhere, including at 30,000 feet.
In an email response sent while onboard a Delta flight, Small wrote that while in the air, she had signed into Sabre, "so I can book a client a last-minute flight for tomorrow and change a hotel for clients on their honeymoon."
Small said she could not imagine being able to function without "instant and constant" access to Sabre.
Airline bookings remain the major driver of GDS use. Sixty-two percent of agents said that air content was the biggest draw of a GDS. (Click on the image left, for a larger view of what goes into the decision when choosing a GDS.)
When asked what percentage of their air bookings were made through the GDS, the most common answer was 90%.
When Dolstra's customers call her to book air, she said it's because Amadeus gives her a selection of choices in a fraction of the amount of time it takes her clients to do it on online. She can swiftly see routes, departure and arrival times and fares as well as variables such as whether a layover is at Heathrow or in Frankfurt. That's important, she said, because one airport might be more attractive than another to her client.
Agents also use GDSs to book hotels and car rentals; when asked what percentage of their car rental bookings were made through a GDS, the most common answer was 95%.
When it comes to hotel bookings, on the other hand, agents have more choices. When asked what percentage of hotel bookings were made through a GDS, the most common answer was 50%.
McClure said GDSs have recently been expanding beyond their comfort zones to give agents new tools and products. As an example, he cited Travelport's Rooms and More, which agents can use to comparison-shop a wide range of hotels and rates provided by hotel aggregators such as Tourico Holidays.
"I believe the GDSs do a very good job of fighting … for content much better than we could do on our own," McClure said.
"Without the GDS in their corner, even the largest of agencies would be forced to negotiate with certain suppliers, and I think suppliers would start to limit content."
This year's survey indicated that more agencies are using applications, including BookingBuilder and Concur's Cliqbook, in conjunction with GDSs. (Click on the image, left, for a larger view showing the percentage of agencies currently using a GDS.)
BookingBuilder brings non-GDS air to agents' desks and automates that booking process. The ASTA survey found that 7% and 8% of agencies, respectively, use BookingBuilder or Cliqbook. But those numbers may skew higher for large agencies, since 35 of the 57 agencies on Travel Weekly's Power List said they use BookingBuilder.
The role GDSs play in agencies' revenue models is changing, and they clearly no longer represent the major streams they once were. Airlines bitterly resented the credits and incentives GDSs paid travel agents, which they viewed as GDSs buying agent loyalty with incentives paid for by the fees airlines paid. Even so, those payments are shrinking.
Agencies still are paid credits or incentives for segments. For a legacy carrier, the most common payment is 20 cents. For nonlegacy carriers, the payment is 80 cents, and for hotels, cruises, cars and other travel products, the most common payment is $1.10.
Looked at in a different way, the average credit was $1.12 for a legacy carrier segment, 94 cents for nonlegacy and $1.43 for hotels, car rentals, cruises and other travel types. Averages in 2010 were $1.07, 80 cents and $1.22, respectively.
Because the average payments are higher, a few agencies are getting higher incentives. But fewer agencies have to meet any kind of booking threshold for minimum number of segments. Thirty-six percent of agencies are on a "no-minimum" pricing plan, 32% have productivity pricing, and 24% have a fixed monthly amount. These incentives still are important selling points: 21% of agencies that had considered dropping their GDS cited segment incentives as one reason for deciding to keep the vendor.
Most GDS contracts (43%) were for three years, while 23% were for five years.
Sixty-three percent of agencies receive credits based on their current contract, and 59% have to exceed a certain number of segments to get those credits. But for most agencies, this is a break-even number. When asked what percentage of their agency's total revenue came from GDS credits and incentives, the most common answer was 1%.
A few agencies did get incentives for signing a GDS contract; 20% got a financial incentive, and 10% received equipment or money to buy equipment.
Sabre continues to dominate the marketplace, with 38% of agencies under contract. But when you combine the two GDSs owned by Travelport (Galileo/Apollo and Worldspan), their total is also 38%. Galileo/Apollo has 21% of agents, Worldspan 17%. Amadeus has 25% of the market, according to the ASTA survey.
What's more, agents tend to stick with the same GDS; 97% said their agency had not switched GDSs in the past two years, and 54% said they'd had the same GDS for 16 years or more. Twenty-eight percent had been with the same GDS for 26 years or more. By far the majority of GDS users (81%) contract directly with a GDS, down from 85% in 2009. Thirteen percent contract through their host. (Click on the image, left, to see a larger view of a chart showing agency satisfaction in GDS content.)
The biggest reason for dropping the GDS is because an agency dropped ARC accreditation.
Overall, 82% of agents said they were satisfied with their GDS, 38% said they were very satisfied, 44% described themselves as somewhat satisfied, 5% said they were somewhat dissatisfied, and 2% described themselves as being "very dissatisfied."
Forty percent of agents said they were very satisfied with what remains a core product for GDSs, legacy air. Another 40% said they were somewhat satisfied with legacy air.
Agents surveyed said they were less satisfied with nonlegacy air, mostly carriers whose GDS participation is recent and, in some cases, limited.
Twelve percent said they were very satisfied with their GDS' nonlegacy air content, while 38% were somewhat satisfied. When it came to car rentals, 38% were very satisfied, and 36% were somewhat satisfied. With hotels, 31% were very satisfied, and 43% were somewhat satisfied.
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